Tuesday, 20 August 2013

CSR and the Environment

The Parliament recently passed
the Companies Bill, which will now replace the Companies Act of 1956. This new
law makes it mandatory for companies to spend 2 percent of their profit on
Corporate Social Responsibility (CSR). Of course, this refers only to companies
with a net profit of more than Rs 5 crore. It is heartening that even before
this law was enacted, companies have been voluntarily spending on CSR projects.
While projects related to education, health and women’s empowerment have been
hot favourites in the CSR sector, environmental projects have recently been
gaining popularity. With CSR now becoming mandatory for corporate biggies, I guess,
or at least I hope, there will be even greater commitment towards addressing the
social and environmental issues we are facing.

In terms of the environment, I
would believe that the first step in exercising responsibility would be for
companies to engage in a sincere and serious green audit of themselves. They
would need to examine the environmental impact of the goods and services they
produce, a review of their production and marketing processes, a thorough assessment
of their own ecological footprint. Obviously, the objective of this exercise is
not just to know the amount of environmental damage the company is causing (no
company is going to put money on the table to dig out its faults), but rather
to determine how this damage can be reduced or minimized.

Further, it would definitely be
worthwhile for companies to invest part of their CSR funds into eco-friendly
technologies. Solar power, for example, would be an area to be explored. Given
the fact that all companies consume huge amounts of energy, be it in their
production plants or corporate offices, moving over to solar energy would
definitely be a step in the right direction. Similarly, in terms of water,
creating rainwater harvesting structures or constructing grey-water recycling
plants, would be highly beneficial. Investing in good waste management systems
is yet another avenue to considered.

And yes, donating CSR funds to meaningful environmental projects is crucial. Often companies approach environmental organizations,
asking them to hold some ‘symbolic event’ such as a tree plantation or clean-up
drive. Sizable funds are poured into these events that produce no results –
except good photographs that can be published in the company’s annual report.
It is time to move from the ‘symbolic’ to the ‘significant’, funding projects
that significantly impact the environment. These ‘significant projects’ are not
‘events’ that can he conducted in a single afternoon, they need time, but in
the end, they make a difference.

Let's hope we see some 'responsibility' exercised as the companies go about acting on the demands of this new 'Responsibility Act'!